USA: Alumium tariff to send ripples through beer and many other industries

President Donald Trump's announcement on February 10 of a 25 percent tariff on all steel and aluminum imports into the U.S. is likely to send ripples through multiple industries, including the beer sector, MSN reported on February 10.

The tariffs, effective immediately, are expected to affect manufacturing and production costs, particularly for businesses that rely heavily on aluminum for packaging.

Aluminum, a key component in the production of beer cans, has already been affected by tariffs in previous years. In 2018, the Trump administration imposed a 10% tariff on aluminum imports, which raised the price of cans and created a financial burden for many brewers. The new 25% tariff could escalate costs further, posing challenges for brewers as they navigate an already unpredictable market.

The beer industry is no stranger to price hikes due to material costs. As one of the largest consumers of aluminum, the affect on beer manufacturers could be significant, especially for those with a heavy reliance on canned products. While many breweries have adapted to the previous tariffs, this increase in steel and aluminum costs comes at a particularly delicate time, as the industry is still recovering from the pandemic's effect on production and distribution.

As the price of aluminum increases, beer makers might face rising production costs, which could be passed on to consumers in the form of higher beer prices. Larger companies with well-established supply chains may be able to absorb some of the additional costs, but smaller craft breweries, which often operate with smaller margins, may get stung more harshly.

The tariff could have an unintended effect on beer sales, especially if consumers find higher prices less appealing. When aluminum costs spiked after the initial tariffs in 2018, the Beer Institute estimated that the industry incurred more than $1.4 billion in additional costs. This could lead to a reduction in consumption, as higher prices may discourage purchasing or shift demand toward more affordable brands or alternative beverage options.

As the tariff goes into effect, beer manufacturers will likely face an uphill battle in managing rising costs while trying to maintain consumer demand. In the short term, the increased tariff could lead to higher production costs and possible price hikes. Over the long haul, the industry may explore new sourcing options, seek alternative materials or push for exemptions to ease the pressure on brewers and consumers alike.